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tv   Power Lunch  CNBC  October 23, 2009 12:00pm-2:00pm EDT

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happy friday, everyone, and welcome to "power lunch." i'm sue herera. simon -- >> thank you for having me. >> it's a pleasure. we have a lot to talk about including a sinking stock market, giving up early gains. among the losers today, exxon and microsoft is one of the winners. >> microsoft shares are surging to an 18-month high. the chief financial officer will join us to give us his profit outlook. is china stealing jobs away from the u.s. because of what it does with its currency? that's what paul krugman is saying. home sales, existing home sales surging 10% in september.
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highest level since mid-2007. wha maybe recovery is stronger than everyone thinks. here's what else is on the menu. ben bernanke is talking about new restrictions on banks. compensation restrictions, liquidity restrictions, and f t faster ways to wind the big banks down. is steve actually working? is the pen mightier than walmart? these book price wars are bad for you, the reader? we'll explain. verizon is stepping up its competition with the cable companies with its new service, which is rolling out to new quadruple play bundled offers. all right. quadruple play.
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let's get to the market action. bob pisani is at the new york stock exchange. >> september home sales. good comments from microsoft. everybody beating on the bottom line. three points i want to make sure. put up the screen. number one problem we have is the existing home sales numbers being discounted because everybody's saying expiration of the first time home buyer tax credit. two, look at the moves we've had. we're at 19 times forward earnings. when there were 16, it was easier to move the market up. finally, the dollar strength. remember, it's the dollar carry trade. not the yen carry tad. the dollar is being used in a different way, so now, you've got economic strength means interest rates are likely going to go up. short covering on the dollar. dollar goes up and then you've got that problem. you've got stocks moving to the downside.
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you'll notice if you look here, the dollar is moving down. the markets have stabilized since about 11:00. since then, it's been doing a little better. really is a relationship here. sue, back to you. our top story right now, microsoft shares surging on the back of its latest earnings report. profit fell almost 20%. however, the company managed to still beat wall street estimates. let's join jim goldman, who is with microsoft's chief financial officer. over to you. >> good afternoon. chris liddell is microsoft's cfo. now, he's coming to us for this interview. good afternoon to you and thanks for being with us. >> great to be here. >> you look at this quarter, when you look at what microsoft was able to do, what was this company able to do right and how
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did wall street miss what appears to be a significant rally? >> was really a good quarter on both perspectives, on revenue and cost side. on the revenue side, we saw particularly strong consumer demand in our winin division and xbox division, so great, early response to windows 7 laun launch. that was on the revenues side. also, people were pleasantly surprised by what we're doing on the cost side. microsoft has not always been seen to have a great cost focus, but we're really focussing on costs, so i think it was a combination of both. >> let's talk about costs for just a little while longer because on the company's conference call, microsoft is reducing its full year operating expenses once again. how are you able to get your
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arms around expenses and see this number decline? >> well, i think it's one of those things you never waste a good crisis is the way that i'd put it. clearly, our response to what happened over the last year was actually very fast. i think i've talked about that in the last couple of conference calls. we really saw the economic downturn as everyone did last year and took a really instantaneous response to it. the hardening thing is that it wasn't just a one or two impact. this is a different world we're going into. we spend a lot of time with him and he has this concept of the new normal. we also subscribe to it. we said we're moving into a new world and we need a cost space
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appropriate for that. so, we took very fast response and have been able to achieve a cost reduction on a continuous basis. not just one quarter. >> let me ask you a windows 7 question here. we are seeing average selling prices stabilize, but as you recognize revenue, is it when that software goes out the there? with the big pc build we saw during the calendar third quarter, it seems like business might be better for you guys in your fourth quarter than people are anticipating. >> they buy licenses in anticipation of selling pcs, so it's up to a couple of months before the actual pc is sold. in the first quarter, we were starting to recognize sales for pcs sold in this quarter. as hopefully the economy recovers and we see not only consumer strength, but
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potentially business strength as well, we'll start to see buying in advance. this first quarter was great in the sense that we're getting great early response to windows 7, but the real impact is going to come in this second quarter. >> you indicated that maybe the worst is finally behind us. the u.s. consumer seems stronger than expected. your entertainment division was ahead of where everyone thaugd it would be. it seems like we are firmly entrenched in what you guys call a recovery. >> we're still keeping people's expectations in check. i describe the conditions as stabilized and potentially getting better. you mentioned xbox, which had a great quarter, but at this point, we're still sees on the business side, relatively
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subdued. we don't forsee an economic recovery on the business side until next calendar year. certainly, a conditions are great and evidence on the consumer side with windows 7 is fantastic. the pc cycle has its own dynamic, but we're still reasonably cautious. >> the world's largest software maker. with a report like this, it's getting bigger, faster. stocks taking a bit of a breather. what can investors expect for the remainder of the season? let's gather our "power lunch" market insiders. david joins us, and tim seymour, host of "trading the globe,"
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which airs tonight. >> we'll talk about that in a second. >> towards the end of wednesday's close, we got to 100. we suddenly died back. couple of downgrades. to what extent do you think the market is now disconnects from the earnings story? >> you get that push -- i think the market on wednesday afternoon was hedging up. i think volatility is so low. i think there's a lot of guys out there that were selling the back end. to me, we all want to see the machines are in control, that's what that was wednesday afternoon. people wants to talk about the downgrade of wells fargo, the beige book. i think this was technical. >> how much of this is about the dollar? seems to me every time it gets strong -- >> there's a link to the dollar.
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clearly, the dollar is an off st setting move to the market. you also see lots of participation in companies which are translating earnings and hence getting a boost, but you also have this very powerful tech sector. you saw it kick off with intel. it says there's going to be investment recovery. not labor job creating recovery. that's very bullish for the tech sector and very u.s. companies because they'll get productivity gains, wider profit margins. it's big. >> do you agree with that, tim, and basically, we've had a much better earnings season than people thought. >> i think it's been fantastic and i think that the stronger dollar here is a sign that actually things are better. remember, if this was crisis time, the dollar was getting stronger because of quality. this is getting stronger because the economy's getting stronger.
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there's expectations, i don't think they're going to happen, but you're going to see stimulus come out of the market. we know around the world, china's data two days ago, they were concerned about inflation. brazil is concerned about inflation. emerging market countries will be the first two him rates and and that tells you how far ahead of us we are. >> earnings companies have been surprising. will it happen to offset revenue? amazon predicting 35% and walmart predicting up to 6% revenue growth nex year on a $400 billion base. >> dennis, if we get revenue growth, the top line starts to grow on top of these productivity gains and cost-cutting margins, we could have explosive stocks. we think that is coming in some of the sectors. not only that, we could see the
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s&p at 1250 or 1300 next spring because of that reason. >> hold that prediction there. >> you kind of opened the door for me to ask you about your show tonight. when you talked about some of the other countries, like china, like brazil, tell what you're going to be covering in this show. >> thank you for the opportunity to talk about the show. i think our goal is to kind of demystify the emerging markets game. in other words, i think this is a generational trade. i've been looking at these markets for over 15 years and have never been this excited about the growth we're seeing. we're looking at companies that may be more innovative, more modern. that a lot of people don't know about. the goal of the network and the show is to bring in some of the best traders on the street and
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highlight the opportunities, the risks and give people the linkage back to the markets and see how they can make money. >> which is why we want to do this now. as you said, it is a generational trade. >> i think we're in the first third of this trade. i think it's a five to ten-year trade. the power stats on emerging markets, this is 81% of the population. this is what we want to be buying. the consumer. >> emerging middle class all over the world. finally. >> absolutely. >> all right. 8:00 p.m. eastern time. >> thank you very much. >> thank you very much for joining us. "trading the globe." very nice logo, by the way. >> i had nothing to do with it. >> he's got the chin, the whole thing going on. now, he's blushing. microsoft and big industrial stocks weighing in this morning. michelle and matt will have it all for you. also, home sales surging
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almost 10%. that was the data out this morning. is the recovery better than you think? plus, more on the bonus backlash. the very same feds who many believe helped cause the crisis now are piling on to restrict pay. is it going to work? and get ready for the "fast money halftime report."
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there it is. earnings season is in full swing. 2/3 of the dow, nearly 200 companies have reported. here to talk us inside, matt nesto. how we doing so far? >> 199 stocks out of 500. i think that's 40%. if you look at the score card, 81% have beaten the estimate. the surprise factor is now 18%. >> on average. >> exactly. we're better than yesterday, which is going to be the blended earnings. that gets us to minus 18%. >> everybody thought earnings would decline 25%. thus far though, it's coming in at only 18%. >> exactly. this is alcoa. this is what the s&p 500 has done and the key number, sorry
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about my scratchy there. the 2.7%. that's unfortunate. so far, on the s&p 500. depending on where you take it from. if you go from just monday, you're up about 1.2%, but so far this week, we are down about 3%. so, there is a debate out there in earnings land in terms of just how good this score card is and why the response, 81% better than expected number is so muted. >> however, you're saying that is because of this whisper when we say 81% have beat, 69% have beat by 12%. >> if you take microsoft for example, the range of estimates was 25 to 37. consensus was 32. they came in at 40. so eight cents better than
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xekted. the whisper was 35. a lot less enthusiasm. >> why don't the analysts just actually make the whisper number the number? >> they don't. it's complicated. what have you're an analyst and you go on maternity leave? it's still part of the -- >> that cannot be a good explanation. >> what if you're a lousy analyst? the whisper number is the real number. >> all right. thank you, matt nesto. >> the look on your face was perfect. all right. >> it's working. up next -- where is that camera? bernanke speaks. economic summit. is the recovery a whole lot
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we're testing 10,000 on the dow, but 52-week highs -- ben bernanke speaking today about the state of the banks and financial regulatory reform. our steve liesman joins us from boston fed conference with highlights. steve? >> yes, thanks very much, dennis. the fed chairman making a pretty wide ranging series of comments on new regulation when it comes to banks. it's going to be a lot harder to run a big bank or costlier,
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after they get done. let me show you a list of the ideas that were in chairman bernanke's speech. compensation restrictions. big story today. guidelines to eliminate compensation of the banks. let's say all that does help to limit the banks and keep them under control, some might still bail. chairman bernanke wants this resolution authority to wind down these big banks. >> the bankruptcy code does not always protect the public's strong interest in avoiding the collapse of a nonbank financial firm that could destabilize the financial system and damage the economy. in light of the experience of the past year, it is clear that we need an option other than bankruptcy or bailout. >> all right. who's going to pay for this?
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the chairman says the industry should pay. it should be with another sort of assessment out there. finally, congress should ensure not just the banks, but all financial institutions that are subject to strong supervision. vice chairman says we need to coordinate this internationally to make sure there's an even playing field, so a lot of stuff in the works. they are talking about some pretty strong regulations. >> stay with us. i want to talk to you about the great recovery. all the experts say consumer is dead. people can't afford homes. gdp can't grow. but what if they're wrong? look at the latest data. bam. existing home sales up in september. retail sales, amazon up 20% in q3. that's stock getting a lift today of more than 20%.
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walmart says sales could rise up to 6% next year. as for gdp, bam, leading economic indicators project growth of up towards 4% next year. what do you say, steve? join me in hailing the recovery that's better than everyone thought it would be. >> you know what, i actually share sympathy with your thoughts. the idea that we've forgotten how to grow, that somehow we've entered the dark achblg ages is the wrong idea. we have a lot of things to get over and head winds, but the idea that we can grow the economy with productivity, i think you're right about that and that people may be underselling the possibly of the economy. >> the thought that american consumer is dead after decades
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was a little premature. >> this is the whole idea of the new normal. we should all get ready for this. are they talking about the new normal out there and do they believe it? >> to answer that question, i want to bring in a special guest. mickey, you heard the question. a new normal. first of all, your idea, dennis's idea. maybe we're underselling the idea of the recovery. >> how is all this affected potential growth? not by that much. we're growing way below potential. the private sector has adjusted and the fed's policy is geared toward an increase in demand. so, the economy's going to recover and history tells us that once economic recoveries begin, unless there's a major policy mistake, that they gather momentum. >> and tend to be sharper. the harder they fall, the
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sharper they bounce back. >> historically, that's been the case and we had been through a financial crisis. there is evidence that internationally, when you have the crisis, the recoveries are slower, but the aggressiveness of the federal reserve and our fiscal authorities may make it stronger than people expect. and we're seeing evidence of that. >> michelle? >> if you and mickey agreeing with dennis that it may be stronger. >> make notes, everyone. the one time steve liesman has had sympathy for me. >> reluctantly. >> also, steve, that you went from santa barbara to cape cod. >> we don't think you're actually working. coming up next, the fire storm over wall street paychecks continues and the same federal reserve many believe helped cause the crisis now piling on to restrict pay. is it right?
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we're watching two live events happening this hour. president obama's going to speak on clean energy at the energying institution in cambridge, massachusetts. on the right, here's pay czar, ken feinberg, about to speak at george washington university law school. we'll bring you any headlines that cross. the controversy over executive pay is now seeping into popular culture. check out "30 rock" from last night. >> is it true that your executives routinely use company helicopters to dry their home tennis courts? >> yes, and no. >> and the ge kept a party clown on retainer with a six-figure
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salary. i've been told that company money is being gambled at racetracks. you tell your president the truth. we don't need the government telling us how to run our industry. why do you have a gavel? this isn't the congress. >> i brought it from home. >> "30 rock" is so great. back to the serious stuff. should the same people who dropped the ball on the financial crisis set the rules for executive compensation? the federal reserve unable to recognize the risk in the system is now going to manage compensation in order to reduce risk? joining us, democratic strategist and chairman and ceo of the free enterprise nation. >> it's not the same guys. it was the bush administration who missed the ball. it's the obama administration that's fixing it.
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it should be corporate governor that determines this. these -- the government essentially becomes a shareholder and that has right to -- >> jim? >> it's a bad idea because government has demonstrated it can't manage its own business. the average federal worker owns twice as much than the private sector worker. the people who ran fannie mae and freddie mac each made millions of dollars a year. we think the government needs to concentrate on its own house first. >> kind of pushes aside this argument that if the government's the biggest investor, they have the right to say. >> the last time the democrats were in control of the white house, we had a surplus in our budget. the reason we had a deficit
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because because republicans acted so irresponsibly. the private sector for the most part, transparency ought to be determining the rules. the government's trying to fix an incentive structure that's just wrong. merely what the government is doing for financial institutions that take government aid is to basically incentivize good decision making. >> do you think the way they are talking about dealing with compensation is going to fix is incentive structure to reduce excessive risk? >> no, i don't think it will reduce the structure. there's always another way to find out how to pay people. the bottom line is that the government shouldn't be deciding how private industry is run. it works well itself. if they fail, they lose their jobs or the company goes broke. >> but government workers never
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lose their jobs. the federal reserve says they're going to look at this compensation structures and help determine whether or not they're going to increase risk. this is the same federal reserve that watched what happened with the housing bubble and said don't worry, there's no rampant risk in the system. >> i think as a general matter, you're guess is correct, that the government should not get involved in compensation. we're talking about the situation where the government is effectively a shareholder with many financial institutions. >> but answer jim's point. when the government is involved in anything when it comes to the postal service for example, we see excessive pay there as well. >> i don't think so that is necessarily true across the board. what the government is doing is saying rather than having guaranteed bonuses and pay, we're going to tie compensation to performance. we're going to put it in cash, stocks and what you will do if you can combine that reform with
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others like capital requirements and getting rid of the conflicts of interest with the rating agenci agencies, then you change the atmosphere. >> will change human nature forever. >> i think it's about the fresh air. >> he's from europe. what do you expect? >> a real anger on main street and you've got to extract the cost from the companies on getting supported. no, no, no, it's not. it's the way forward. watch and learn. >> you're on the record. we're going to be like europe. it will be okay. up next, the book brawl. first, walmart and amazon slash book prices to under ten bucks. and in a few minutes, apple this, google that. why doesn't microsoft get any
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respect? that's next. all right, when you look at the future of your business, what do you see? is the glass half-empty or half-full? well, with ups, you could eliminate warehouses. streamline your supply chain, and even reach new global markets. so your business is more adaptable, more efficient and more profitable. hey, the opportunities are out there. seize them with ups. is anybody else thirsty?
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we told you about amazon's
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book war with walmart. now, they're calling for an investigation of what is called predatory pricing. jane wells joining us with more. what's the allegation then, jane? >> have you ever been in a walmart? >> have i ever been in a walmart? i've not yet had the joy of a walmart. >> field trip. >> no. anyhow, we're talking about the war of words over the price of words as the book sellers association asked the department of justice to investigate price slashing to below $9, alleging it is illegal, predatory pricing, damaging to the industry. quote --
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they're arguing that prices could rise and some think it would encourage more reading. others think it would convince people to never spend 25 bucks for a book again. >> that will take time to resolve and whatever happens here, by the time it's revolved, at least on the walmart and target side, they will have accomplished what they wanted. it's almost irrelevant to them. deutsche bank saying quote, the book business may be in a secular tail spin and amazon may still win because it also offers free shipping. and advisers saying the current fight quote, not a profitable strategy. >> all righty. thank you so much. still ahead, blow out
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earnings from amazon. will online retailing save the holiday shopping season? >> something's on your mind, dennis. >> i think the sellers are a bunch of wusses. >> that's another story. up next, the techs are on top. tune in to "fast money halftime report" after this. fidelity, traders learn from the pros. say you want to backtest an entire portfolio of stocks. market experts show you how through fidelity's extensive trading knowledge center. and fidelity gives you free research from 15 independent firms, with accuracy scores... to help you decide which analysts to trust. find out why more and more active traders are turning to fidelity for a smarter way to trade online. trade like a pro. trade with fidelity.
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markets losing steam despite better than expected home sales data. should you be buying this afternoon? let's get to our crew today -- steve, let's kick it off with you. we had leadership off the tech sector, then sort of lost it. we saw the semiconductors really fell off the cliff there. broadcom was a real disaappointment there and they're saying they don't have visibility into the holiday season. >> all the concerns that are
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playing the investors, those names that are strong in tech world are going to continue to be strong. even though the pe ratios look terrible, i think they're going to remain strong. we're definitely on the trend line, the lower end of it. i think we're still going to go higher, but we're bouncing around the end of it. >> are there tech names right now, semiconductor space? >> i'm going to be looking at the stronger leaders now, which is apple and amazon. they're selling products people want and gaining market share. that is key. i'm going to be looking to buy these stocks. >> we're not only seeing a pullback in technology, but the broker index has been weak. jim, what do you see? the earnings from the big banks and credit card issuers at this
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point. >> there's always such tremendous options activity in those names. i think everything smacks regulation right now. we talked about the seven big banks that are going to regulate pay. as that kind of momentum builds, we see more negative plays and it's rolled over and a function of the market as a whole. i think we're going to see a sharp pull back in that. >> wants to take a look at the s&p 500. just 24 hours ago, we were eyeing 1100. we're looking at a different story today. >> the last few days, we've seen a manic trade. there's been a fight between the bulls and bears in this upper level. each day, we've had very key signs of either breaking below, which we saw wednesday. today, we thought we'd break above.
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there's still a fight going on. if we break above 1100, it clears the way to about 1120, 1125. >> on the downside, scott, waer looking at what? >> if we break below 1075, i could see a move to the moving average. >> okay, so right now, we're closer to the break lower level than the break higher level. jim, using that information, what sort of strategy can people put on using options? >> i think we should take advantage of the low volatility levels because in a move lower, it's going to spike higher and it's still relatively cheap. i'd put on some put spreads. i like his like to buy at the m and sell something in that area there and take advantage of the cheapness. >> let's move on and talk about who is topping the tape today in a down tape. microsoft and amazon, both
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companies blowing past analysts' estimates. microsoft trading higher by about 7% -- 6.5%. amazon up more than 21%. dramatic moves. amazon at decade highs. valuation can be a little scary. jeff, we had two shops out today raising the price target to 130 bucks which puts it at a 39 pe for next year's earnings. what's the trade here at this point? >> right now i think there's no trade. and again let me make this -- myself clear, you could put on a trade. i just have to use tight stops. but again, if you're looking at a longer term play here, you got to wait for a pullback. these stocks have had unbelievable up moves, but confirmed with the fundamentals like i said before, they are encreasing their market share and they have products that people want, but you have to wait and be patient. >> scott, look at the chart for amazon because if you take a look over time, it is making higher lows, which is positive in a way. it's building its way higher. what do you see here ahead for
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amazon? >> amazon has definitely been a stock to own. it's at historical highs where there are not a lot of stock there is. technically and fundamentally it's been a great story. but your entries are very important. you never enter is stock at historic highs. wait for a proper base to be built so you can use the proper entry. >> and microsoft not at historic highs, levels we haven't seen since spring of last year, but still what do you think the trade is here given the hoopla over windows 7 and the upcoming holiday season? >> i think investors are excited about the new product line they have. i think it's a nice place to put some money. it's definitely not in the class of an amazon or apple, but there's deft buy side interest in microsoft. >> want to fit in some options actions. jim, you're watching the home buildings. we had positive home sales data. inventory reached levels we haven't seen for a while. seven-plus months on the market. what do you see? >> i love the whole story.
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yesterday we saw a tremendous amount of short-term call buying in the home builder etf, xhb, and then several of the names that happen to be components of that as well. a ton of buying. i think people were thinking they have two events for the price of one. they have today's housing numbers and you should make a mental note when you see activity like that, it probably is a good precursor to maybe people have done their homework to what numbers are going to be. but you also get the potential for these tax credits, there's a buzz about them being extended or expanded. they have that within the next couple weeks. a lot of people piled into this trade yesterday and it was good. they got the number they wanted today, but there was only a short window to get out. you have to be nimble to make money on this. any time something lights up on the screen, it's worth taking note of. >> heavy activity yesterday in short dated options. therefore, they're expecting this event to happen question quickly. >> and it did. it happened today. they got their good home prices number, but i'm not sure there was enough time for the amount of people to get out of the trades they needed to. >> quickly, we have ten seconds
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here. >> i think risk/reward, these things got ahead of themselves. we've had the tax credit, had low interest rates. we need actually people to get jobs to buy homes. i don't like this trade. >> i'm not saying i don't agree with you, jeff. i agree with you. >> let's move on. a big bullish fest in under the radar name tivo in the options pits. we're joined by the monster, jon najarian on the fastline. dr. j, what are you seeing in tivo today? >> well, a lot of buying all the way from december out to february of the just out of the money calls n particular this name moving up nicely. tivo has popped, and we see 300 to 1 calls to puts changing hands into the weekend. you know that frequently we look for things like unusual activity into a weekend to be a harbinger of something good coming next week. >> like a deal? >> could be a deal. there could be a settlement with some of the folks, dish network and directv they've got disputes
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with. i don't know any insight beyond that, but look at the calls, 15,000 trading. normal activity is 2,000. and this thing is zooming to the upside. >> dr. j, always good to talk with you. have a great weekend. we're going to take a pause on the halftime report. on tonight's "fast money" we from washington to wall street with paul ryan. up next, after being treated as the rodney dangerfield of tech stocks, is microsoft finally gotten its mojo back. "power lunch" will debate that. we'll continue right after. earnings seasons kicked off the market party, but as a runup loses steam, will the good stocks go bad? ♪ i'll make some good girls go bad ♪ >> the gang on how to play a market that might turn on you. and it's been the monster trade this week with earnings blowouts leading the charge. is tech the trade to keep? while stocks pause to take a breather, could this trade stoke another fire? we get the pulse from the options pits on america's post-market show tonight. ♪ come on baby light my fire
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welcome back to the halftime report. time to call the close. let's go around the horn. do you buy or sell into this friday closing bell? kick it off? >> i do believe the market as a whole is moving higher. in the next couple days i think we're going to move lower. >> jeff? >> i have been wrong all week, but i'm going to try to sell. >> scott? >> as long as we hold 1080, i'm a buyer. >> i think this year we've seen the stock market decouple with the dollar. i think it's a near term top, i sell it. >> that does it for us. do not miss the premiere of "trading the globe" 8:00 p.m. followed by "options action." up next paul krugman says china is stealing jobs from the u.s. is he right? >> here is the book. it is a terrific read. you see my little bookmark here.
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it's a terrific read. we will talk to him about na. coming up on "power lunch" at 1:00 p.m. eastern time, does microsoft have its mojo back? we'll talk about that. women and power. today a fascinating woman, very powerful woman, caroline rose hunt will join us. she runs a number of five-star hotels. at 1:40 p.m. eastern time, will online retailers save the holiday shopping season? they will if i have anything to do with it. we'll be back in a minute. securities has gotten a wells notice from the s.e.c. involving of it possible violations. the case involves fixed income securities. forecasting firm jd powers says auto sales should be down about 6%. that would be the first single digit drop in 17 months. amazon shares are up 25% touching a ten-year high
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following its earnings report. i'm courtney reagan. welcome to the second hour of "power lunch." i'm sue herera. bill griffeth is off today. simon hobbes is joining us. >> thank you very much. >> stocks is lower today. that comes despite much better than expected home sales report out earlier today. microsoft is leading the dow and the nasdaq. amazon is leading the s&p 500. >> all the doom and gloom predictions about holiday retail sales, are they overblown? will the cliques bail out the bricks? >> and i'm michelle caruso-cabrera. it is war. they are doing everything they can to grab subscriber from the cable companies. now they're bundling four things together. are they going to win this smackdown? >> it's the first time men have ever been interested in four-play. >> oh, stop it. i'm dennis kneale.
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if you take six to eight hours to complete a marathon, can you really call yourself a runner? how low is that bar? we'll take a look at that. and everybody knows -- >> i just don't even -- >> that everybody goes nuts whenever apple releases a new product or google announces a new program. what about microsoft? the release of windows 7, when was the last time anyone got excited about anything new from microsoft? why doesn't that company get the respect a guy that holds 95% of the pc market might deserve? and will that change? let's ask -- i think we have spencer with "business week" with us. the poker faced spencer. i just feel like everyone just looks at microsoft like chopped li liver, and yet they have a lock on the pc market despite years of challenges. >> it's true, dennis. i think microsoft does not get a lot of respect from investors. the stock has been trading
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sideways for eight years. it's worth about $250 billion. that compares to apple worth about $180 billion and google worth $175 billion, but here is the problem. as you know, microsoft was the leader in the pc era, and it has not been able to translate its dominance into the internet era, and until it does that, it's not going to get more respect from investors. >> paul at ten asset management is now with us. paul, i don't think anyone can dominate the internet. i don't think goggle has dominated the internet. is microsoft just too old for us to respect more? >> you know, yeah, i absolutely agree, no one is going to dominate the internet. the idea is it's sort of plug and play and everyone connects. on that level i totally agree. so that's not going to change just because microsoft launches windows 7. the thing i think is kind of interesting about windows 7 and this launch is that in a strange way microsoft i think is going to surprise investors a bit here because vista was a disaster, and so now most people are
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sitting out there with windows xp which is an eight-year-old operating system. microsoft has created a kind of y2k problem. they are now going to have to do a forced mass upgrade. i think microsoft will be surprised at how quick windows 7 actually gets picked up but not because it suddenly figure out the internet. just because it has all these bottled up people sitting there with an eight-year-old operating system. >> spencer, i know you're not a stock picker, you're a journalist, but if you're giving advice to your mom, you're looking at apple, google, microsoft, nothing, which place would you tell your mom to place her bet. >> microsoft i think is starting to get some of its mojo back because what paul referred to, this windows 7 launch. the last time they launched windows it was a disaster for the most part this. one is getting a much more positive response from the marketplace. in addition, microsoft is starting to make some headway in internet search.
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they closed the big deal with yahoo! and they -- >> buzz on bing. >> they also announced bing which has gained a little market share. i think it's got some wind behind its sails. >> paul, which stock would you tell your mom to put her money in. >> microsoft, but i hate this bing story. >> it's all about just the accidental upgrade? >> the accidental upgrade. >> that's good enough reason though, right? >> can i challenge the premise of the question, please? >> sure. >> they just showed a three-year chart which showed google is only marginally outperformed microsoft during that period of time. i would suggest to you actually because of the nature of the products that apple makes that appeal to media types on the east coast of the united states, apple gets a disproportionate amount of attention. it's only actually got 10% of the market. >> yeah, but that's -- >> microsoft is a value story, surely. >> yeah, that's true, but look at the data from in summer that showed that 90% of the market for $1,000-plus computers are
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now apple. you have a giant base who have to move. but the momentum is in apple's favor. there's more going on than a bunch of -- >> if you look at microsoft, yes, maybe i agree with simon, it could be viewed as the value place, but if you talk about who has the cash, does that microsoft a more compelling story for you? >> that certainly gives you a lot of stability. also microsoft and its very rare, they offer investors a dividend which gives at 2% yield. the other thing i would say is apple has also an enormous cash hoard of over $30 billion and they're leading the way in the mobile wireless arena which is the next big area of growth for tech. >> and their cash hoards have more or less done this. microsoft's cash hoard has gone down while apple has gone up. the cash hoard is only available in so far you believe there's
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interesting things they can acquire. >> all right, gentlemen, that's a wrap. thanks very much for being with us. have a great weekend. simon? >> thanks, guys. the push for china to revalue the yen appears to be picking up steam. paul krugman says china's bad behavior is a growing threat. will china make a move on its currency. joining us is robert lawrence kuhn, also a senior advise tore citigroup. the ou they aauthor of a new bo. what's your view on the currency. >> the most important thing is stability of the country to provide the opportunity for them to deal with some very serious domestic problems such as i am balan -- imbalancing in income,
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pollution. >> that's related to the currency how? that means it does float, doesn't float, what? >> that means that they will do whatever they think at any given moment to protect stability and currently they do want to maintain exports, to maintain exports the currency cannot appreciate from their perspective more than very little. as we know from when they decoupled the currency and allowed it to float, it increased about 20%. was increasing until the financial crisis, and then they put a lid on t for the last year or so, it's been very stable. i don't look for any dramatic change. >> from the u.s. perspective, robert, it just seems like the more we pressure them to do something about their currency, the more they will resist. the chinese hate being told what to do, right? >> that's absolutely right. that's a way of thinking that goes back a long time.
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that never works with china. even when they were weak whenever they were pressured, they'd go in the other direction so. that's very wise advice. that's not the best way to go about it. the best way is to work together behind the scenes to look for win/win situations, and i believe they are there because between the united states and china, a great deal of the prosperity and the stability of the world will depend over the next decade. >> you know, dr. kuhn, it was really fascinating to read your book. first of all, you had access that i don't think anybody has ever had to the large number of people at the top in china. you have a chapter called the economic future, how far can china go, and there's a passage in there where you are quoting one of the politboro members. he advised us to be totally linked. if we had done that as many had
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implored us, what a disaster it would have been. given the state of the economies around the world they have a pretty valid point, do they not? they went by the straight and narrow. they didn't completely link. they don't have a lot of debt. they're sitting on a hoard of cash and they're our biggest investors. it sounds like they did it the right way. >> if you go back a decade or so, the big story in the world was the disaster of the chinese financial institutions, all the banks were effectively bankrupt. everybody was telling them what they had to do, and if you look at the market cap of the largest banks in the world today, you know, three or four of them are chinese. so they look upon what they've done, they certainly don't think they're perfect. they have a huge number of problems, but they said we've got to deal with our problems and we must maintain stability. >> sorry. forgive me for interrupting. on that theme you're highlighting. is there a perception amongst the people you spoke to that china is grabbing a moment in time when the big powers, notably the united states, are
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distracted by the obvious problems they've had? i'm thinking about particularly buying up the energy companies, the oil companies, even canada i saw recently and west africa and latin america because they're able to combine these huge reserves with a public sector that has a direction and arguably a mixed economy the private and public are split as you see in the united states. >> you bring up an extremely important point, but it is less a preplanned strategy than a reaction to what events have occurred. chinese leaders would have preferred to wait 10, 15, 20 years to get their dough mess tishg house in order, to get the social imbalancing protected before emerging more on the world scene. the financial crisis changed their way of thinking. i saw that at the end of 2008, beginning of 2009 as i was doing my new book, "how china leaders think" and suddenly they realize they have no choice, they must deal internationally. they must be on the forefront economically, politically, having their companies out in the world buying things
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cautiously, concerned about public reaction. but china leaders have no options now. they are spending a much higher percentage of their own time domestically on international affairs. this is not what they had planned. it's something that has been foisted on them by the financial crisis, but this is how they now think. >> well, it's about stability, as you said. >> good luck with the book. >> good luck with the book. >> she said in unison. thanks. trading the globe with tim seymour, speaking of china, that's one of the markets and countries he'll be looking at. that's tonight at 8:00 p.m. eastern time. straight ahead, we'll round up the all-stars and take the real time pulse of the market. >> shares of amazon exploding to the upside on a power house earnings report. will online save the retail season? >> you're watching "power lunch" on cnbc because we are first in business worldwide.
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the dow is struggling to hold onto dow 10,000 here. the s&p 500, we were talking about 1100. what's going on? let's get to our market
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reporters at the new york stock exchange. bob? >> september existing home sales a lot better than expected, but there was an effect there. the dollar moved to the upside. that's put pressure on stocks. that's the most important thing these days. look at the transports. it's been an ugly week for the transportation stocks. down about 5.5% for that index. nothing else is down nearly as much. you have railroads hurt pretty hard. burlington northern took down their estimates late last night. that's hurting them. the airlines did not have particularly good earnings comments this week. all the big stocks in this group are to the downside, 4%, 5%, even 6% on the week. the materials stocks and the energy stocks, as the dollar moved up, that put preshg on the ov overall market. the dollar is smacking the stock market around. dole foods, their big ipo this week, they got it out $12.50, it's trading below that right now. remember, the price talk was $13 to $15. next week we're going to get
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vitamin shoppe and a big natural gas play, aei which owns a lot of natural gas and facilities in emerging markets. that will be a hot stock next week. i will talk about that on monday or tuesday. scott, how are we looking at nasdaq? >> the nasdaq is flat right now. of course, we continue to follow both microsoft and amazon. microsoft shares hitting a new 52-week high. better than expected earnings. microsoft shares up about 6%. look at amazon. the stock is sitting right now at an all-time high. $117. this move to the upside by 25.5%. better than expected earnings. it's the best one-day move in the stock in some 2 1/2 years. just blowout numbers there. in fact, if you were to look at the volume, come out to the wall for a second. these two charts, one on the top is microsoft. the one below is amazon. they track market velocity, the activity in the stocks. both of the stocks in the first half hour of trading today exceeded their average daily
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volume in the first 30 minutes. that shows you the kind of activity that was in these stocks today. elsewhere in big cap tech, it's mostly a mixed picture. the real reason why the nasdaq has dipped into negative territory, it's right here, broad com. they gave a weak outlook. just as optimistic as amazon was, broad com was unsure. the stock is down 8%. the semi-conductor index in general is down. a real weakness in the chips sector. let's go to bertha. >> thanks very much, scott. we saw oil retreat and commodities overall as the dollar got stronger today, but we're almost to the point where we're almost back up near $81 a barrel here on crude. as these markets continue to follow the dollar move, we had dipped below $80 earlier when we saw that late morning surge on the dollar index relative to the fact that we are seeing the
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pound versus the dollar get hit hard. the euro versus dollar continues at above $1.50 exchange, and as far as the metals are concerned, we see some softness still in gold here late in the session. gold will be closing at 130, but we continue to see copper at 13-month highs. a lot of traders are talking about watching the economic recovery, watching the stock market recovery, anticipating that, but wondering whether the fundamentals on all these commodities is getting ahead of itself. let's move over to chicago and rick santelli. >> thanks, bertha. the theme of everything i'm going to talk about for the next few seconds will be liquidity. if you look at the first chart, you can see around 10:00 eastern the market gave up ground. one of the reasons is all the liquidity we're throwing into housing is still making many wonder is this just a house cash for clunkers? the second chart you need to look at, bertha talked about, it look at the british pound. they spent boat loads of
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liquidity to try to stimulate the economy. their data came out for gdp. instead of being up a couple tenths, it was down 0.4. one week chart of ten-year rates, liquidity might be running out in one aspect. there's only one buy back in treasuries left. let's keep an eye on that next week. the last chart, six-month chart of corn, it's at four-month highs. you might be asking what does this have to do with liquidity? this is mother nature's liquidity. you can't get the machines in, get the corn out, the fields are a bit wet. we want to watch these grain markets. back to the ec gang. >> you just put simon into shock with the move on the pound. >> that's a huge move, even against the dollar for goodness sake. we're going to talk about that later on. >> it was horrendous. >> we have a contraction in the uk we never thought we'd get. >> straight ahead, women and power. oh, who cares? kidding. she's the daughter of legendary oil tycoon h.l. hunt, but
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caroline rose hunt founded her own empire, the rosewood. >> was that a lot of sponsorships leaving the building? >> several 52-week highs. see you on the other side. next week on "squawk on the street" nobody covers earnings like us. scores of big names will report. we'll have the scorecard a big part of our focus will be on the oil stocks. exxonmobil and chevron will both release earnings. we're watching oil itself. up big this month. what will the impact be on the overall economy? we have the opening bell every single day. plus, "squawk on the street." weekday mornings from 9:00 to 11:00 a.m. nt investors?
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some of the key market indicators we like to look at. dow lower by 97 points. crude oil is lower by 60 cents. $80.59 as we see a slight rebound in the dollar today because those gdp numbers out of the uk. >> we're wrapping up our week-long series on "women and power" with a very special guest. she's caroline rose hunt. she carved out an empire of her own when she founded the rosewood hotels and resorts 30 years ago. names i know you all know like
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turtle creek, the rosewood mansion on turtle creek. she joins us now. it's a pleasure to have you here, caroline. welcome. >> thank you. i always love to talk about rosewood hotels. >> i bet you do. you're in an interesting point at this point in not only your career but also in the economy because a lot of people are talking about the fact that people are cutting back on travel and that luxury hotels might suffer, but your properties are quite unique and have been quite resilient despite the economic downturn. >> well, of course, we are affected, as all business related travel is, but we are very fortunate. we have many loyal customers and because of the economy, we are taking steps to offer them even a better opportunity to enjoy their travel.
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>> the hotel you have in mexico, one of the hottest properties in the last couple of years. as you develop new hotels, even in this kind of tough economy, what's the most important thing to make sure that people are going to come? >> well, we've always been noted for our tradition of excellence, and service, we feel, is the most important thing, and by that i mean not stuffy service, but true friendly service. we are a -- our hotels are small by comparison and very personal, and we pay such very -- there are certainly other elements. we pay very strict attention to the location and where we are, and we want our hotels to reflect that in every aspect. even including the cuisine.
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i like to eat and i'm proud to say a grande dame along with julia childs, the fifth one ever named, and i didn't get it for my own cooking. i got it for our restaurants. >> you -- can i interrupt for one moment, if i may, because this is our "women on business" segment. you have obviously seen a lot over the decades as a successful woman in business. has the advice you've given young women wanting to make it as entrepreneurs or even perhaps in corporations, has that changed during the course of your lifetime? >> very much so. it was unusual to have a woman and leadership in a company, and now we have many ceos and many have leadership roles.
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i think i was noticed because i went into business in a visible way after the age of 50, and many women older than 50 have told me, well, you were an inspiration to me because once my children left home, i just felt like i should be doing something, and you have given me the confidence to try. >> miss hunt, it was a pleasure to have you. >> and i'm proud of that. >> it was a pleasure to have you here. i know you go into the office every day and i know you're a busy lady, so we'll let you go. thank you for joining us. >> thank you. i enjoyed being here. >> i love her. >> she is an inspiration. she took the mansion, it was going to be torn down, turned it into turtle creek. we go on and on. >> how is trading shaping up overall? we'll get you ready for all the
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action with the trader triple play. >> it's a tongue twister. >> that's pmy first time on the trader triple play. >> this is a week with a barrage of new 52-week highs. he have ensco, eastman chemical, freeport-mcmoran, rowan, and compuware.
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welcome back to "power lunch." here are some of the stories we're following this hour. american home sales rebound to a two-year high. existing home sales surge 9.4% in september. that's well above expectations. and, in fact, it's the best level they've had since july 2007. fed chairman ben bernanke speaking out today. he wants cog to stangress to st moving away with regulation reform. the fed is working on its own measure to shore up the health of the financial system. honeywell posting a 15% drop in third quarter profits.
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the company says revenues were hurt by weak sales of commercial airlines. honeywell shares are trading down about half a percent on the day. all right. so it's friday. that means we do the trader triple play. joining us now from the nyse is matt, jack bouroudjian, and at the nymex we have ray car borbo. we have both stocks and treasuries waeshg tod treasuries weak today. it seems it's all about the dollar actually rebounding today. is that what drives trading next week? >> i would think so. unless you've been living under a rock for the last nine trading days. the dow is where it was since we broke 10,000. a lot of big companies reporting earnings. i would think the dollar, we'll see how it will affect trading next week. >> is that going to be the same case for oil, anthony? we see the market moving smartly
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higher throughout this week. we're up above the trading session high just a short while ago. what about oil next week? >> ray. >> i'm sorry, ray. >> okay, yes. it is truly the dollar looks like it's going to settle above 150 today. certainly that's supportive of commodity prices. we see gold unchanged and metals very strong. the numbers next week will mean something. do we keep drawing down? does the distillate show -- >> my apologies, ray. you look nothing like anthony, you're much more handsome. >> and jack, what about the bond market? will that be driven by the pile of economic data or still focused on the dollar? >> i think the bond market has a mind of its own. i think what we have to pay attention to is if we start to see some asset allocation models start to take hold. will we see money coming out of
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the fixed income market and into equities? that seems to be the pattern, and a lot of it is being driven by the dollar. a lot of that money that's been sitting in that safety net, that short end of the yield curve or even in the ten-year for that matter is all money that would normally go into equities in foreign countries and those that are sitting in euro or yen are using the dollar as a discounting mechanism. >> 132 now, matt. the dow is down 132 now. it fell like -- it was up 130 yesterday. so we're kind of flat. what's going on here? >> well, you know, what's funny is we have yet to have a follow through on the sell side at least in the last few months. the shorts haven't pressed the issue. we haven't seen that downside. they have been willing to buy stocks on small dips. >> you're not worried about it. >> i'm not worried about it right now. i think if we close below 10,000, the selling could accelerate. >> just to be clear, given the amount of time we've spent above 10,000 at the moment, would we have achieved that as a level or
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have we failed at 10,000 and therefore have a double top? >> william, we haven't really had any reason to break higher above t i think people are waiting to see it really break out above the 10,300 level on the dow. if we close below ten, i would be more inclined to sell. >> earnings season, that's what all this volatility is. we're trying to figure out what the value for this market is. before we figure it out, more than likely we'll get a lot more volume pit. >> see you next week. >> obviously with the markets under some pressure, we'll follow that throughout the afternoon, just want to breck away for a moment to talk about the fact that it's not just the dollar that's getting punished. the british pound has really take an beating today on new data that showed the uk economy is still in recession. the british economy shrank 0.4% in the third quarter surprising economist who is were expecting
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it to grow. now, this is the first time that uk gdp -- i beg your pardon, we've now contracted -- overall we've lost over 5% of the size of the u.s. economy so far this year. i'm talking about it not because i'm here from the uk, but because you guys could be looking at the uk as an example of the situation that you find yourselves in. it's another way of looking at your own economy because the rest of the world isn't like us. it's the u.s. and the uk that have very similar problems. we thought actually that the uk might be the first to stop the quantity of easing. stop the printing of money actually before you guys did. that would be perhaps the world cycle turning for central banks. they cannot now stop the quantity of easing. >> they can't really do anything right now, can they? >> and are you suggesting the quantitative easing hasn't necessarily worked and isn't going to work for us? >> well, that's a debatable point. >> now, wait a minute, guys, if i may step in. in the u.s. third quarter it's widely expected gdp grew 3% and
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it's supposed to grow around that for the fourth quarter. that's an extraordinary number for an economy that was at a near death experience and that's entirely because of how the federal government has stepped in, right? >> let me come back to the point i was trying to make, dennis. the expectation was the uk economy would grow by 0.7%. >> what do you think from your knowledge of the british government, are they going to be even more strict than the u.s. government is on trying to crack down on all this risk taking or less strict? >> a huge debate in the uk between the prime minister and the central bank. you know it's not resolved yet. you're a naughty man. >> again with the naught, you say naught a lot. naught 0.4. >> what's the long term implications for sterling? the move we saw today in the british pound was stunning.
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>> as you see, with the argument about the dollar here, it's all about interest rates. it's the pouget at which the interest rates differential will bring people back into the national currency. things are bad for the pound and arguably good for the dollar, but maybe good for the american economy. >> over to me on the west side. time now for our daily look at the most widely followed stories on website's managing editor allen waffler joins us with what's clicking. microsoft, and a wrap up of what microsoft 7 is all about. and all the apple ads with a little amusement. >> they have hated each other for decades. >> but the commercials are cool. another thing, vix, a bad sign. we have one analyst -- we sort of paired up different comments about the vix, which is the fear gauge. one analyst is saying it's fall because it's been bouncing around 20, 22. it's a sign of complacency. that means the market might get
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out of the blue. >> never be happy with anything. >> we also got another analyst saying if you want to hedge, go long the vix. if it goes bad you are at least protected. >> friday fun vacation days. we looked at all the countries in the world, how many vacation days they get. in the u.s. we don't have mandated vacation time, but we have about 15 -- >> half. >> we put some eye candy in there. >> which why our productivity grows at twice the rate of the rest of the world. >> the b bricks may be cool, but the cliques are hot. profits rising 62%. so with the malls a little quiet, will online retail save the holiday shopping season? and check out shares of some of the online retailers today. amazon in the wake of its earnings up 23 bucks. 116 bucks a share.
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amazon shares are up $23. a new 52-week high. and perhaps more importantly, its outlook. the online retailer does see holiday sales far exceeding expectations. somewhere in the range between $8.15 billion and $9.15 billion in revenue. could they be the one retail they're helps save christmas? let's ask the experts. ken joining us with nielson net ratings and collin gille s.
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why would you have a sell rating on the stock given the outlook they just put out? >> we had a solid september quarter out of amazon. and a decent outlook, but tough remember that this is a company that is just egregiously valued. obviously, that valuation is becoming even more egregious over time. it's gained about $10 billion in market cap on what was a $50 million net income. >> collin, i'm sorry, but doesn't that miss the point. you told people to sell, and today it's up massively. >> absolutely. >> you have to get with the market. >> simon, i'm with you. there's no doubt about it, but you also -- we have a 12-month look on the name. if you look out longer term, there's still a lot of competition that amazon is facing. so physical media it's sell something still under pressure. books are going away. physical cds and physical movies. walmart is going to becoming an increased competitor. and you're seeing price competition coming in more and
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more between target and walmart. even though we may get more revenue growth out of amazon, that doesn't necessarily mean it's going to translate into stronger net income. >> we keep looking at the idea if online sales are strong, regular retail sales are weak. does one take away from the other? maybe if i shop a lot online it will stoke my demand to go into stores. >> the two channels tend to move in the same direction. if i looked back ten years ago, when brick and mortar -- that online sales were increasing so quickly that it was practically irrelevant when we looked at it against brick and mortar. however, today broader macroeconomic trends are definitely coming into play, and while we might have expected in a year like this to see 10% to 15% growth in the channel, the economy is certainly dragging that down. however, the internet is seen as a value channel by consumers, and there is certainly a benefit i think recently manifested by amazon that we're seeing in
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that. >> what do you make of collin's point that, okay, yeah, amazon has been able to raise their revenue guidance, but they're also facing a lot of margin pressure because they just entered into a price war with both walmart and target and maybe the top line doesn't translate to the bottom line. >> it's a price pressurines are significant. there's more transparency of prices online. the reality is amazon has been competing on a price bay stsis a long time. the current environment we're in is a bit tougher than in the past. i think amazon has held up well enough competing on low margins in the past that i wouldn't expect to see that change a lot going forward. >> collin, regarding a price competition, walmart just slashing book prices on eight best sellers. if decided to start underpricing amazon on electronics, on dvds, what kind of problem for amazon do you see? >> absolutely. amazon is going to match those
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prices. in many cases they're selling goods with sezero margin. this beat in the september quarter, it was only a 50 million bottom line beat. the real question for amazon is can they achieve leverage? does revenue growth mean extra leverage for the company? >> thank you very much, collin and -- you were going to come in there. >> this is really a moment. >> the price leader in online and the price leader in brick are now coming together and they are head-to-head. this is going to be brutal. >> which means sale! that's what it means. >> can it be long before some little seven-11 can be telling the fed to investigate antitru t antitrust. >> it's a battle for your living room, the den, telcos are taking on the cables. who will win this war?
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julia boorstin will tell you right after the break. >> you're watching cnbc, first in business worldwide. so we're shooting in china. no! no! so we're shooting in argentina. i don't hate this. you good? hey, i'm the producer. i just make it happen. and did i mention it's a film about... parisian squirrels that ride bikes? scooter. who ride scooters? i like what you're doing very much. my director... he can be a bit... i want to go back to china. much. but on tonight's flight... i can just sleep. [ announcer ] the new international business class. only on american. we know why you fly. why squirrel hate me? been putting our clients first. according to a leading independent research firm, in 2009 clients rated wells fargo advisors the #1 u.s investment firm for doing what's best for them.
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the war between cable and k telecom heating up again. verizon slashing prices, bundling services. will this help or hurt? we have julia boorstin with a look at this. julia? >> well, dennis, verizon is looking for new growth drivers. it's under pressure as americans cancel their land line service. verizon is hoping its new cable product will take a piece of the cable giant's business. offering special discounts for triple and quadruple play bundles with its cell phone and broadband service. even giving gift cards to new subscribers. it's only cost-effective for verizon to roll it out to 18 million homes. it poses limited risk to the cable giants. verizon's wireless business is also in the spotlight. it's lost share to at&t and it's
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only its upcoming google droid phone with be a success. the industry gets increasingly saturated and competitive. >> as growth slows down, you have an awful lot of operators. we refer to it as simply too many cooks in the kitchen. you've got too many players who are independently setting prices and in a high fixed cost low variable cost business like wireless, that sets the stage for a price war. >> earnings are expected to be flat with the same quarter last year at 59 kretz pcents per sha. revenue is expected to be 10% higher. one other factor wall street is keeping an eye on is verizon's 6.5% dividend yield. the question is how long can they keep that up. >> thanks for the updade from los angeles. frightening new data out on swine flu.
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robert bazell joins us with an update on that. hi. >> how are you doing? there's two things going on in the united states right now with swine flu. one is an enormous amount of flu out there. the cdc just came out with its weekly report. the disease is widespread in 46 states. all indications are that we're having a severe as epidemic of influenza right now as we have in the worst seasons of january and february, and there's no indication that it's slowing down or stopping. at the same time at one point a few months ago the government was promising by now there would be 20 million doses a week of vaccine against this new strain of virus coming out. in fact, there is a total of 11.6 million doses available. all over the country where there have been attempts to give out the vaccine, the sites have been swamped. there have been huge lines. people staying out all night. clearly in what many scientists say is a race between the virus and the vaccine, the virus is winning for now. there have been a lot of
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production problems at the various manufacturers and they're not able to keep up with what they promised they would be able to deliver. not something that's surprising for vaccine because this is ancient technology. the vaccine is made in eggs, as we have all seen in many times. and it's just not working the way they wanted. >> bob, the other day our mike huckman had an exclusive with dr. vasella of novartis and was talking about the issue you brought up, the possibility of shortages. the doctor said they would not be able to ship large quantities until about the end of december and said the approximately 100 million doses that novartis plans to make may not arrive until the first quarter of next year. what are the implications of that? >> well, it means a lot of people are going to get florida who might have been protected if it was there sooner. the problem has been that in order to make vaccine, you have to grow virus in eggs. this virus has grown very slowly in eggs for every company except
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for metamune that makes this mist. there's lots of that available, and fortunately that is a very good vaccine for people between 2 and 49 and have no other health problems. that can help a lot of school kids and young people. and health care workers. that's been pushed, but for the rest of the people who need the vaccine, it's just not coming along. >> bob, thanks. appreciate it very much. bob bazell. >> that's a little scary. >> i'm still mystified how the hand sanitizers are supposed to stop this. >> all right. coming up here, should slow pokes be allowed to run in maratho marathons. frankly, i don't think anyone should be allowed to. it's too far. and the waiters in a legendary steakhouse have a big beef with the owners. fithe same tools the pros use,
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we call this "empty calorie." it maybe should be burning calories today. there's new data that shows the length of the average marathon run is getting long and longer because they allow everybody and the people who really run the marathons are pretty darn tired of it. they say if it took you six
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hours, you couldn't actually run it. this should be for the elite. if you organize a marathon -- >> there's harsh. not very sporting. >> and it has no impact. the fast runners are at the front of the pack. the slow guys have no effect on the fast runners. it's purely a snub. >> i think if you are inspired to run a mare than or walk a marathon, you should do t my mother-in-law in her 80s has done five. >> these fast runners would ban her. >> she does 5ks. >> let's talk about the wage dispute with waiters in one of the most famous steakhouses which was actually the sight of one of the most famous mob hits. sparks stake house. they settle for $3 million in back trips. i hope they report it to the irs. >> because the house was ripping them off, skimming. >> skimming a little bit. >> did somebody say one -- >> very famous. we're obsessed with the mafia in
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america. >> we're also obsessed with this market. a triple digit loss on the dow. we also have some very interesting dynamics in the commodities markets and in the dollar today. and oil is still above the $80 mark. so there are a lot of dynamics that will play out as this market gets closer to the close. right now we are down triple digits. that does it for us on "power lunch." melissa francis is in for erin on "street signs." uaw workers at five ford plants have backed a revised contract bringing labor costs more if line with gm and chrysler. voting will continue next week. the house oversight committee has opened a probe into possible deceptive mortgage lending practices. it's subpoenaed documents. the treasury is considering replacing it's 20-year inflation protected securities with a 30-year version. that's it for


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